Budget 2015-16 FAQ

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Subject to passage of the law amendments by the Legislative Council, individual taxpayers will get a one-off reduction of 75% of the final tax for the year of assessment 2014/15 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $20,000 per case. Furthermore, child allowances, the implementation of which requires law amendments, will be increased from the year of assessment 2015/16 onwards as follows :

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You only need to file, as usual, your 2014/15 tax return for individuals (BIR60) which will be issued in May this year. After enactment of the relevant legislation, IRD will effect the tax reduction in the final assessment for 2014/15. If you are eligible to claim child allowance or additional child allowance for new born child in the year of birth, IRD will apply the new allowances in calculating the 2015/16 provisional tax. For 2014/15 assessments issued before the legislative amendment, IRD will revise them after enactment of the legislation. It is expected that the excess tax paid, if any, will be refunded to taxpayers starting from mid August 2015. There is no need for you to make a separate application.

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You are required to pay on time the 2nd instalment of the 2014/15 provisional tax falling due from April 2015. Otherwise, recovery action will be taken by IRD. Similar to previous occasions, the tax reduction is to reduce the 2014/15 final tax that will be charged and not relating to the 2014/15 provisional tax that has already been charged. Therefore, you are still required to pay the 2014/15 provisional tax as charged.

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As the tax reduction is to reduce the 2014/15 final tax that will be charged, the reduction will only be reflected in the notices of salaries tax assessment, profits tax assessment and personal assessment for 2014/15 that will be issued starting from the third quarter of 2015. The tax reduction is not applicable to the 2014/15 provisional tax. The provisional tax paid will be applied to pay the 2014/15 final tax and 2015/16 provisional tax. Excess balance, if any, will be refunded.

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You can use the tax computation program (www.gov.hk/etax) to calculate your 2014/15 and 2015/16 salaries tax and tax under personal assessment.

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Under personal assessment, all income of an individual taxpayer, including salaries, will be aggregated to compute the tax payable. Hence, the amount of tax reduction for the year 2014/15 is 75% of the tax assessed under personal assessment and not the tax payable under salaries tax.

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Profits tax, salaries tax and tax under personal assessment for the year of assessment 2014/15 are reduced by 75%, subject to a ceiling of $20,000 per case. Under salaries tax, a husband and a wife are separately assessed. Each of them will get a tax reduction of 75%, subject to a ceiling of $20,000. However, under personal assessment, there is no separate taxation and only one assessment will be issued. Therefore, the tax reduction for the couple is 75%, capped at $20,000. Whether a taxpayer should apply for personal assessment will depend on his situation. When considering an election for personal assessment for the year of assessment 2014/15, taxpayers should take into account the factor that the tax reduction for each couple will be capped at $20,000. IRD will check each personal assessment election to see if it will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.

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For each business, you can get the tax reduction of 75% of the profits tax payable for 2014/15, subject to a ceiling of $20,000.

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You can claim Child Allowance of $100,000 and a one-off allowance of $100,000 in the year of assessment in which your child was born (i.e. 2015/16). In the years thereafter, you can claim for each year a Child Allowance of $100,000 in respect of the child as long as other prescribed conditions are satisfied.

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You can complete Part 8.2 of the 2014/15 tax return for individuals by providing details of your new born child. IRD will grant Child Allowance of $200,000 for that child when computing your 2015/16 provisional tax.

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After your child is born, you may apply in writing for holding over of the 2015/16 provisional salaries tax charged. The application must be lodged not later than: 

Besides, when you are completing the 2015/16 tax return next year, please fill in details of your child for claiming the Child Allowance.